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COMPLIANCE SUPPLEMENT FOR AUDITS OF LOCAL GOVERNMENT ENTITIES

BUDGETS

REVISION DECEMBER 2017 REF: CT02

ContentsGENERAL.................................................................................................................................... 2

EXPENDITURES LIMITED TO APPROPRIATIONS................................................................2

APPROPRIATIONS – ADJUSTMENTS/AMENDMENTS.........................................................3

APPROPRIATION OF BOND PROCEEDS................................................................................3

FEE-BASED BUDGETS – ADJUSTABLE APPROPRIATIONS...............................................3

RESTRICTION WHEN LEVY REQUIRES VOTER APPROVAL.............................................4

PRELIMINARY ANNUAL OPERATING BUDGET..................................................................4

FINAL BUDGET AND RESOLUTION.......................................................................................5

BUDGET AMENDMENT PROCEDURES..................................................................................6

EMERGENCY EXPENDITURES................................................................................................6

DETERMINATION OF FUND REQUIREMENTS – PROPERTY TAX LEVY.........................6

APPROVAL OF & FIXING THE TAX LEVY............................................................................7

PROPERTY TAX LIMITATIONS & PROCEDURE FOR CALCULATING LEVY..................8

LEVY AUTHORITY CARRIED FORWARD.............................................................................9

EXCEPTIONS TO THE GENERAL PROPERTY TAX LIMITATIONS....................................9

DETERMINATION OF TAX REVENUE AND MILL LEVY LIMITATIONS UNDER MCA 15-10-420.................................................................................................................................... 10

MILL LEVY ELECTION........................................................................................................... 10

PERMISSIVE MEDICAL LEVY...............................................................................................11

INSTALLMENT PURCHASE CONTRACTS...........................................................................12

CAPITAL IMPROVEMENT FUND...........................................................................................12

CITY/TOWN MILL LEVIES......................................................................................................13

Montana Compliance Supplement

Rev-December 2017 CT02-Budgets of 20

GENERALLocal government defined: For purposes of the Local Government Budget Act (Title 7, Chapter 6, Part 40, MCA), a “local government” is defined as a consolidated city-county or a county or an incorporated city or town.MCA 7-6-4002 & 7-6-602

Budget supplied to State: A local government shall submit a complete copy of the final budget together with a statement of tax levies to the Department of Administration by the later of October 1 or 60 days after receipt of taxable values from the Department of Revenue. The local government shall use standard budget forms prescribed by the Department of Administration or may use an alternative budget format acceptable to the Department.MCA 7-6-4003

Prescribed Fund Structure: Local government budgets must conform to the fund structure prescribed by the Department of Administration; i.e., the county’s accounting structure must follow the chart of accounts for the Budgetary, Accounting, and Reporting System (BARS) for Montana Cities, Towns, and Counties.MCA 7-6-4004

EXPENDITURES LIMITED TO APPROPRIATIONSLocal government officials may not make a disbursement or an expenditure or incur an obligation in excess of the total appropriations for a fund. (MCA 7-6-4005) Money may not be disbursed, expended, or obligated except pursuant to an appropriation for which working capital is or will be available.MCA 7-6-4006(2)

Note: MCA 15-24-3007 explicitly indicates that the electrical generation impact fund must be financially administered as a nonbudgeted fund under the provisions of Title 7, chapter 6, part 40, MCA (i.e., the Local Government Budget Act) which, as noted above, contains no provision for “nonbudgeted funds”.

A local government official who violates the preceding requirement is liable for the amount of the excess disbursement, expenditure, or obligation personally. The subsequent claims approval process may not be considered as the making of a disbursement or an expenditure or as incurring an obligation and does not otherwise limit or mitigate the local government official's personal liability.MCA 7-6-4005

The governing body and each municipal official are limited to the amount of appropriations and by the classifications in the annual appropriation resolution provided for in 7-6-4030 when making disbursements or expenditures or incurring liabilities.



Exceptions to this limitation are discussed below: 7-6-4006 (adjustment/amendment of appropriations), 7-6-4011 (appropriation of bond proceeds), 7-6-4012 (fee-based appropriations), 7-6-4015 (payments for judgments), and 7-6-4032 (emergency expenditures).MCA 7-6-4033

APPROPRIATIONS – ADJUSTMENTS/AMENDMENTS Appropriations may be adjusted according to procedures authorized by the governing body for:

a. debt service funds for obligations related to debt approved by the governing body;b. trust funds for obligations authorized by trust covenants;c. any fund for federal, state, local, or private grants and shared revenue accepted and

approved by the governing body;d. any fund for special assessments approved by the governing body;e. the proceeds from the sale of land;f. any fund for gifts or donations; andg. money borrowed during the fiscal year.

MCA 7-6-4006(3)

The governing body may amend the budget during the fiscal year by conducting public hearings at regularly scheduled meetings. Budget amendments providing for additional appropriations must identify the fund reserves, unanticipated revenue, or previously unbudgeted revenue that will fund the appropriations.MCA 7-6-4006(4)

APPROPRIATION OF BOND PROCEEDSThe authorization of bonds by the electors or the governing body constitutes the appropriation of the bond proceeds for the purpose for which the bonds are authorized.MCA 7-6-4011

FEE-BASED BUDGETS – ADJUSTABLE APPROPRIATIONSIn its final budget resolution, the governing body may authorize adjustments to appropriations funded by fees throughout the budget period. Adjustable appropriations are:

(a) proprietary fund appropriations; or(b) other appropriations specifically identified in the local government's final budget

resolution as fee-based appropriations.MCA 7-6-4012(1)

Adjustments of fee-based appropriations must be: (a) based upon the cost of providing the services supported by the fee; and(b) fully funded by the related fees for services, fund reserves, or nonfee revenue such as

interest.



MCA 7-6-4012(2)

RESTRICTION WHEN LEVY REQUIRES VOTER APPROVALIf an expenditure is to be financed from a tax levy required to be authorized and approved at an election, the expenditure may not be made or an obligation may not be incurred against the expenditure until the tax levy is authorized and approved.MCA 7-6-4014

PRELIMINARY ANNUAL OPERATING BUDGETA preliminary annual operating budget must be prepared for the local government.MCA 7-6-4020(1)

Minimum elements of preliminary budget: The preliminary annual operating budget for each fund must include, at a minimum:

(a) a listing of all revenue and other resources for the prior budget year, current budget year, and proposed budget year;

(b) a listing of all expenditures for the prior budget year, the current budget year, and the proposed budget year. All expenditures must be classified under one of the following categories:

(1) salaries and wages;(2) operations and maintenance;(3) capital outlay;(4) debt service; or(5) transfers out.

(c) a projection of changes in fund balances or cash balances available for governmental fund types and a projection of changes in cash balances and working capital for proprietary fund types. This projection must be supported by a summary for each fund or group of funds listing the estimated beginning balance plus estimated revenue, less proposed expenditures, cash reserves, and estimated ending balances.

(d) a detailed list of proposed capital expenditures and a list of proposed major capital projects for the budget year;

(e) financial data on current and future debt obligations;(f) schedules or summary tables of personnel or position counts for the prior budget year,

current budget year, and proposed budget year. The budgeted amounts for personnel services must be supported by a listing of positions, salaries, and benefits for all positions of the local government. The listing of positions, salaries, and benefits is not required to be a part of the budget document.

(g) all other estimates that fall under the purview of the budget.(h) The preliminary annual operating budget for each fund for which the local government

will levy an ad valorem property tax must include the estimated amount to be raised by the tax.

MCA 7-6-4020(4) and (5)



Notice of preliminary or amended budget: The governing body shall cause a notice of a public hearing on the preliminary or amended budget to be published. The publication requirements for a municipality must conform to the provisions of 7-1-4127 (See CO01-General Topics). The notice must:

a. provide that the governing body has completed its preliminary annual budget for the ensuing fiscal year or intends to amend its annual budget;

b. state that the budget or budget amendment has been placed on file and is open to inspection in the county office designated in the notice;

c. designate the date, time, and place of the meeting at which the governing body will meet for approving a final budget or amended budget and making appropriations; and

d. state that any taxpayer or resident may appear at the meeting and be heard for or against any part of the proposed budget or budget amendment.

MCA 7-6-4021

Public hearing on preliminary or amended budget: The governing body shall hold a hearing in accordance with the notice given pursuant to 7-6-4021 (above). Local government officials shall attend the budget hearing to answer questions on their proposed budgets if called upon by the governing body, taxpayer or resident. The hearing may be continued from day to day and must be concluded and the budget finally approved and adopted by resolution by the later of the first Thursday after the first Tuesday in September or within 30 calendar days of receiving certified taxable values from the department of revenue.MCA 7-6-4024

FINAL BUDGET AND RESOLUTIONThe governing body may amend the preliminary budget after the public hearing and after considering any public comment. The amended budget constitutes the final budget, and must be balanced so that appropriations do not exceed the projected beginning balance plus the estimated revenue of each fund for the fiscal year.MCA 7-6-4030

Final budget resolution: The governing body shall adopt the final budget by resolution. The resolution must:

(a) authorize appropriations to defray the expenses or liabilities for the fiscal year; and (b) establish legal spending limits at the level of detail in the resolution (i.e., fund, function,

etc.).MCA 7-6-4030(3)

The effective date of the resolution is July 1 of the fiscal year, even if the resolution is adopted after that date. (MCA 7-6-4030) A local government may receive and expend money between July 1 of the fiscal year and the date the final budget resolution is adopted.MCA 7-6-4025



BUDGET AMENDMENT PROCEDURESThe annual budget appropriations may be amended as provided in 7-6-4006(3) and 7-6-4012.

Transfer of appropriations: The final budget resolution may authorize the governing body or a designated official to transfer appropriations between items within the same fund.MCA 7-6-4031

Overall increase in appropriation authority: A public hearing is required for an overall increase in appropriation authority. Exceptions to this general rule are:

a. When the governing body authorizes procedures for adjusting appropriations for specific purposes (7-6-4006(3))

b. Appropriation of bond proceeds (7-6-4011)c. Fee-based budgets (7-6-4012)d. Payments for judgments (7-6-4015)e. Emergency expenditures (7-6-4032)f. Emergencies under Title 10, Chapter 3, MCA (Disaster and emergency services)

EMERGENCY EXPENDITURESEmergency budget appropriations must be adopted by two-thirds of the members of a governing body who are present at the meeting. These expenditures are limited to and must be charged to the adopted emergency budget appropriations.MCA 7-6-4032

Note: The governing body may submit the question of funding emergency warrants at an election as provided by law.MCA 7-6-4032(3)

DETERMINATION OF FUND REQUIREMENTS – PROPERTY TAX LEVYAfter determining the final budget, the governing body shall determine the property tax levy needed for each fund by:

a. adding the total amount of the appropriations and authorized expenditures for the budget year;

b. adding an additional amount, subject to the limitation noted in the next compliance requirement below (Cash Reserves), as a reserve to meet expenditures made from the fund during the months of July to November of the next fiscal year;

c. subtracting the working capital; andd. subtracting the total estimated revenue, other than the property tax levy, for the budget

year.MCA 7-6-4034(1)



Note: However, the tax levy is capped by the provisions of MCA 15-10-420 – See below.

It is against the policy of the law to raise taxes faster than the money is likely to be needed. In the absence of statutory authority, a tax cannot be levied for the sole purpose of accumulating funds in the public treasury, such as for remote or future contingencies which may never arise, nor can it be levied in excess of the amount required for the purpose for which it is levied, with the intention of using the excess for another purpose. Rogge v. Petroleum County (1938)

Authorized reserve: After deducting from the amount of the appropriations and authorized expenditures the total amount appropriated and authorized to be spent for election expenses and payment of emergency warrants, the amount that may be added as a reserve to any city or town fund may not exceed one-half (1/2) of the total amount appropriated and authorized to be spent from the fund during the current fiscal year.MCA 7-6-4034(2)

APPROVAL OF & FIXING THE TAX LEVYGoverning body approval and exemptions: The proposed budget and mill levy for each board, commission, or other governing entity are subject to approval by the governing body. However, except for a port authority created under Title 7, chapter 14, part 11, the taxes, revenue, or fees legally pledged for the payment of debt or for the operations of a regional resource authority) are not subject to approval by the governing body.MCA 7-6-4035

The governing body shall fix the tax levy for each taxing jurisdiction within the municipality:a. by the later of the first Thursday after the first Tuesday in September or within 30

calendar days after receiving certified taxable values; b. after the approval and adoption of the final budget; andc. at levels that will balance the budgets as provided in 7-6-4034

MCA 7-6-4036

Note: The Department of Revenue is required to submit the certification of taxable values by the first Monday in August. Upon the request of a taxing authority, the DOR shall provide an estimate of the total taxable value by the second Monday in July.MCA 15-10-202

Each levy:a. must be made in the manner provided by 15-10-201. MCA 15-10-201 provides that the

governing body shall make and fix every levy in mills and tenths and hundredths of mills.

b. is subject to 15-10-420 – Procedure for Calculating Levy, MCA 7-6-4036

Note: Certain levies are identified in 15-10-420 that are exempted from the provisions of 15-10-420. See below for those exempted levies.



PROPERTY TAX LIMITATIONS & PROCEDURE FOR CALCULATING LEVY Tax Year 1996: Except as provided in 15-10-420 (see following), the amount of taxes levied on property may not, for any taxing jurisdiction, exceed the amount levied for tax year 1996.MCA 15-10-402

Maximum Mills: A governmental entity that is authorized to impose mills may impose a mill levy sufficient to generate the amount of property taxes actually assessed in the prior year plus one-half of the average rate of inflation for the prior 3 years. The maximum number of mills that may be imposed is established by calculating the number of mills required to generate the amount of property tax actually assessed in the governmental unit in the prior year based on the current year taxable value, less the value of newly taxable property plus one-half of the average rate of inflation for the prior 3 years.MCA 15-10-420(1)(a)

A governmental entity may apply the levy calculated above, plus any additional levies authorized by the voters, as provided in 15-10-425 (see below), to all property in the governmental unit, including newly taxable property.MCA 15-10-420(2)

Note: See 15-10-420(3) & (4) for discussion of what is, and what is not, included in “newly taxable property”. The release of taxable value from a tax increment financing (TIF) district is included, as is the increment value of a TIF district in the year in which it terminates.

The Department of Revenue has calculated the inflation factor to be used in the calculation above as follows:

2014: 1.03%2015: 1.03%2016: 0.67%2017: 0.50%2018: 0.59%

For purposes of the calculation above, taxes imposed do not include net or gross proceeds taxes received under MCA 15-6-131 and 15-6-132.MCA 15-10-420(6)

In determining the maximum number of mills, above, the governmental entity may increase the number of mills to account for a decrease in reimbursements; and may not increase the number of mills to account for a loss of tax base because of legislative action that is reimbursed under the provisions of 15-1-121(7).MCA 15-10-420(7)



LEVY AUTHORITY CARRIED FORWARDA governmental entity that does not impose the maximum number of mills, as described above, may carry forward the authority to impose the number of mills equal to the difference between the actual number of mills imposed and the maximum number of mills authorized to be imposed. The mill authority carried forward may be imposed in a subsequent tax year.MCA 15-10-420(1)(b)

EXCEPTIONS TO THE GENERAL PROPERTY TAX LIMITATIONS The tax levy limitation discussed in 15-10-420(1)(a) does not apply to the following: Note: These exceptions are subject to subsection (8) which refers to the mills imposed on a state-wide basis for the university system, basic county taxes for elementary and high school equalization, state equalization, and vocational-technical education. These sections establish mill levy limits.

1. school district levies established in Title 20; or2. a mill levy imposed for a newly created regional resource authority per MCA 7-10-101.

MCA 15-10-420(5)(a) & (b)

The tax levy limitation discussed in 15-10-420(1)(a) does not prevent or restrict the following levies: Note: A levy authorized under subsection 15-10-420(9)(a) may not be included in the amount of property taxes actually assessed in a subsequent year.MCA 15-10-420(9)

See Table for discussions of these levies

1. a judgment levy under 2-9-316, 7-6-4015, or 7-7-2202;2. a levy to repay taxes paid under protest as provided in 15-1-402;3. an emergency levy authorized under 10-3-405, 20-9-168, or 20-15-326;4. a levy for the support of a study commission under MCA 7-3-184;5. a levy for the support of a newly established regional resource authority per MCA 7-10-

101;6. the portion that is the amount in excess of the base contribution of a governmental

entity’s property tax levy for contributions for group benefits excluded under 2-9-212 or 2-18-703 (i.e. Permissive Medical Levy - See below).

7. a levy for reimbursing a county for costs incurred in transferring property records to an adjoining county under 7-2-2807 upon relocation of a county boundary; or

8. Effective July 1, 2017 a levy used to fund the sheriffs' retirement system under 19-7-404(2)(b).

A governmental entity may levy mills for the support of airports as authorized in 67-10-402, 67-11-301, or 67-11-302 even though the governmental entity has not imposed a levy for the airport or the airport authority in either of the previous 2 years and the airport or airport authority has not been appropriated operating funds by a county or municipality during that time.MCA 15-10-420(10)



Note: This exception only applies when the county or municipality has not levied or appropriated any assistance to the airport in the prior two years; providing that when the airport levy is discontinued, that amount is subtracted from the entity’s levy authorization amount.

DETERMINATION OF TAX REVENUE AND MILL LEVY LIMITATIONS UNDER MCA 15-10-420In determining the total number of mills allowed under subsection 15-10-420(1)(a), the governmental entity increases or decreases the number of mills necessary to generate the maximum authorized property tax under this subsection. This has been commonly referred to as the "floating mill." Many local governments use a worksheet to calculate revenue limitations and the maximum allowable mill levy, including the "floating mill."

Versions of sample worksheets are located on the Department of Administration’s web site at http://sfsd.mt.gov/LGSB/Forms/AccountingSystemsProgram/2_BudgetReports.

MILL LEVY ELECTIONA local government entity may impose a new mill levy, increase a mill levy that is required to be submitted to the electors, or exceed the mill levy limit provided for in MCA 15-10-420 by conducting an election.MCA 15-10-425(1) & 7-6-4431

A mill levy election may be held in accordance with Title 13 part 4 or 5, or Title 20, as appropriate, in conjunction with a regular or primary election, or may be a special election. The governing body (1) shall pass a resolution; (2) shall amend its self-governing charter, or (3) must receive a petition; indicating the intent to impose a new levy, increase a mill levy, or exceed the current statutory mill levy provided for in 15-10-420 on the approval of a majority of the qualified electors voting in the election. The resolution, charter amendment or petition must include:

(a) the specific purpose for which the additional money will be used;(b) either:

i. the specific amount of money to be raised and the approximate number of mills to be imposed; or

ii. the specific number of mills to be imposed and the approximate amount of money to be raised; and

(c) whether the levy is permanent or the durational limit on the levy.The ballot must contain the specific information required in MCA 15-10-425(3).MCA 15-10-425(2) & 7-6-4431

Note: MCA 15-10-425(2) & 7-6-4431 previously had the same wording, but 15-10-425 was updated by the 2007 Legislature to include option (b)(ii), above, while 7-6-4431 was not. It appears that the intent of the Legislature was to provide another option for the wording to be used in a resolution, charter amendment or petition for a mill levy increase.


http://sfsd.mt.gov/LGSB/Forms/AccountingSystemsProgram/2_BudgetReports


The governing body may reduce an approved levy in any fiscal year without losing the authority to impose in a subsequent fiscal year up to the maximum amount or number of mills approved in the election. However, the governing body is not authorized to impose more than the approved levy in any fiscal year or to extend the duration of the approved levy.MCA 15-10-425(5) & 7-6-4431(3)

PERMISSIVE MEDICAL LEVY If a local government makes contributions for group benefits under MCA 2-18-703, the amount in excess of the base contribution as determined under 2-18-703(4)(c) (see below) for group benefits (referred to hereafter as the permissive medical levy) is not subject to the mill levy calculation limitation provided for in 15-10-420. Permissive medical levies must be calculated separately from the mill levies calculated under 15-10-420 and are not subject to the inflation factor described in 15-10-420(1)(a).MCA 2-9-212(2)(a); 2-18-703(4)(b)

Note: For the purposes of this section, “group benefits” means group hospitalization, health, medical, surgical, life, and other similar and related group benefits provided to officers and employees of political subdivisions, including flexible spending account benefits and payments in lieu of group benefits. The term does not include casualty insurance, marine insurance, property insurance, surety insurance, and title insurance.

Not Applicable to Proprietary Fund Contributions: Contributions for group benefits paid wholly or in part from user charges generated by proprietary funds, as defined by generally accepted accounting principles, are not included in the amount exempted from the mill levy calculation limitation provided for in 15-10-420.MCA 2-9-212(2)(a)(i)

If tax-billing software is capable, the county treasurer shall list separately the cumulative mill levy or dollar amount on the tax notice sent to each taxpayer under 15-16-101(2). The mill levy must be described as the permissive medical levy.MCA 2-9-212(2)(a)(ii)

Public Hearing Required: Each year prior to implementing a permissive medical levy, after notice of the hearing given under 7-1-2121 or 7-1-4127, a public hearing must be held regarding any proposed increases.MCA 2-9-212(2)(b)

A permissive medical levy in the previous year may not be included in the amount of property taxes that a governmental entity is authorized to levy for the purposes of determining the amount that the governmental entity may assess under the provisions of 15-10-420(1)(a). When a permissive medical levy decreases or is no longer levied, the revenue may not be combined with the revenue determined in 15-10-420(1)(a).MCA 2-9-212(2)(c)



Calculation of “Base Contribution”: Subject to the following, the base contribution is determined by multiplying the average annual contribution for each employee on July 1, 1999, times the number of employees for whom the employer makes contributions for group benefits under 2-9-212 on July 1 of each fiscal year.MCA 2-18-703(4)(c)

Note: See self-calculating form online at http://sfsd.mt.gov/LGSB/Forms/AccountingSystemsProgram/2_BudgetReports)

If a local government did not make contributions for group benefits on or before July 1, 1999, and subsequently does so, the base contribution is determined by multiplying the average annual contribution for each employee in the first year the political subdivision provides contributions for group benefits times the number of employees for whom the employer makes contributions for group benefits under 2-9-212 on July 1 of each fiscal year.MCA 2-18-703(4)(c)(i)

If a local government has made contributions for group benefits but has not previously levied for contributions in excess of the base contribution, the base is determined by multiplying the average annual contribution for each employee at the beginning of the fiscal year immediately preceding the year in which the levy will first be levied times the number of employees for whom the employer made contributions for group benefits under 2-9-212 in that fiscal year. MCA 2-18-703(4)(c)(ii)

The Department of Administration has established BARS Fund Number 2372 for the Permissive Medical Levy.

Transition Provision: A local government that levied mills for group contributions pursuant to 2-18-703 in fiscal year 2009 may for the fiscal years 2010 through 2014 levy the greater of:

(a) the dollar amount levied in 2009; or(b) the amount determined in 2-18-703.

However, the actual dollar amount may not include an amount for group benefits paid from user charges described in 2-9-212(2)(a)(i) (i.e. Proprietary Funds).

INSTALLMENT PURCHASE CONTRACTSThe budget for each year must contain an appropriation for each installment payment that is due on installment purchase contracts.MCA 7-5-4306

CAPITAL IMPROVEMENT FUNDA county, municipal, or special district governing body may establish a capital improvement fund for the replacement, improvement, and acquisition of property, facilities, or equipment that costs in excess of $5,000 and that has a life expectancy of 5 years or more. A capital


http://sfsd.mt.gov/LGSB/Forms/AccountingSystemsProgram/2_BudgetReports


improvement plan for the fund must be formally adopted by the county, municipal, or special district governing body.MCA 7-6-616(1) & (2)

The capital improvement fund may receive money from any source, including funds that have been allocated in any year but have not been expended or encumbered by the end of the fiscal year.MCA 7-6-616(3)

Other sections of State law that provide specifically for capital improvement funds for specific purposes include: MCA 7-14-2506 (road and bridge); MCA 7-33-2111 (rural fire districts).

CITY/TOWN MILL LEVIESNote 1: Subject to 15-10-420, the city or town council may levy and collect taxes for general and special public or governmental purposes on all property within the city or town subject to taxation under the laws of the state. (MCA 7-6-4401 & 4421; 7-1-4123(5)) The purposes in the table, below, include the purposes specifically identified in MCA 7-6-2527 that relate to municipalities, as well as additional purposes that have specific statutory levy authority. Public and governmental purposes include but are not limited to those purposes specifically identified in MCA 7-6-2527.Note 2: All of the following levies are subject to the budget limitation of MCA 15-10-420 (see above), unless specifically exempted.Note 3: It is against the policy of the law to raise taxes faster than the money is likely to be needed. In the absence of statutory authority, a tax cannot be levied for the sole purpose of accumulating funds in the public treasury, such as for remote or future contingencies which may never arise, nor can it be levied in excess of the amount required for the purpose for which it is levied, with the intention of using the excess for another purpose. (Rogge v. Petroleum County, 107 M 36, 80 P2d 380 (1938))Note 4: Subject to 15-10-420, a consolidated local government may levy all taxes that counties, cities, and towns are authorized to levy. (MCA 7-3-1104) Note 5: For tax levy information related to special districts, see also CT016 – Special Districts.

General 7-6-4401

General provision that allows the city or town to levy a tax annually for public or governmental purposes.

All-Purpose7-6-4451 - 4455

Cities and towns are authorized to make an all-purpose annual mill levy in lieu of the multiple levies authorized by the statutes of Montana. The all-purpose mill levy does not include levies imposed for bonded indebtedness, to pay judgments or tax protest refunds, or for special improvement district revolving funds of municipalities. Subject to 15-10-420, additional levies may be made in addition to the all-purpose mill levy.

Note: All Other Purposes Listed Alphabetically



Airport/Ports or Joint Airport/Ports67-10-4027-6-2527

For the purpose of establishing, constructing, equipping, maintaining, and operating airports and ports.Note: See above related to the authorization to levy mills for support of airports for which a levy has not been imposed in either of the previous two years.

Airport Authority67-11-30167-11-303(6)7-6-2527

An airport authority may certify annually the amount of tax requested to be levied by each municipality participating in the creation of the airport authority. The levy may not exceed the maximum levy that may have been established in the resolution creating the authority.If the voters approve a resolution adopted by the governing body, an additional tax may be levied, limited to an amount sufficient to meet the deficiency for payment of revenue bond principal and interest, if such a deficiency exists.

Ambulance7-34-1027-6-2527

To defray the costs incurred in providing ambulance service

Band and Recreation7-16-4113

For the purpose of providing band concerts

Bond Principal and Interest 7-7-42657-6-4453

Not subject to 15-10-420 if issuance of bonds approved by voters: To be used for the payment of interest and principle of each series or issue of bonds outstanding – a separate tax must be levied for each series or issue. The levy must be high enough to raise an amount sufficient to pay all interest and principal due and payable during the current fiscal year or within 90 days after the fiscal year. If no principal becomes due and payable within that time, then the levy must be high enough to raise an amount sufficient to place in the sinking fund, for the payment of the principal when it becomes due, an amount not less than a sum produced by dividing the whole amount for which the bonds were originally issued by the number of years for which the bonds were originally issued to run. This levy may be in addition to the all-purpose general levy.

Bus Service (City Bus)7-14-4404

To defray the cost of transportation service pursuant to a contract, lease, or lease and operating agreement with an independent carrier or carriers. Whenever necessary to raise money by taxation for transportation services in excess of the levy allowed by 15-10-420, the question of the additional levy must be submitted to the electors.

Day-Care Centers and Homes (Licensed)7-16-21087-16-41147-6-2527

To establish and maintain programs for the operation of licensed day-care centers and homes – expenditures must be made solely for the establishment, maintenance, and development of programs for and training of operators and employees of day-care centers and homes.

Developmental Disabilities Facilities53-20-2087-6-2527

Municipalities may contribute to any developmental disabilities facility approved by the State Department of Public Health and Human Services, without regard to whether the facility is within or outside of their jurisdiction. Proceeds from a tax levy for this purpose must be used for the support of developmental disabilities services.



Economic Development90-5-1127-6-2527

For the purpose of economic development – the governing body may submit the question of the mill levy to the qualified voters as provided in 15-10-425 or may approve the mill levy by a vote of the governing body. Funds derived from this levy may be used for purchasing land for industrial parks, constructing buildings to house manufacturing and processing operations, conducting preliminary feasibility studies, promoting economic development opportunities in a particular area, and other activities generally associated with economic development. The funds may be used to contract with local development companies and other associations or organizations capable of implementing the economic development function; but may not be used to directly assist an industry’s operations by loan or grant or to pay the salary or salary supplements of government employees.

Emergency/Disaster10-3-405

Not subject to 15-10-420: The millage levied by the governing body of the county shall not exceed 2 mills on the taxable valuation of the county outside the municipalities. All levies under this section may be passed only by a unanimous vote of the appropriate body.Funds levied for an emergency and remaining when no further expenditures are necessary shall remain in a separate emergency fund (BARS Fund #2260) and shall be used only for expenditures arising from future emergencies.

Fire Department (Volunteer)7-33-4111

For the purpose of supporting volunteer fire departments in any city or town that does not have a paid fire department and for the purpose of purchasing the necessary equipment for them.

Firefighters' disability income insurance or workers’ comp coverage (Volunteer)7-6-6217-33-4111

Voter-approved levy, (i.e., subject to 15-10-425, not subject to mill levy limitations of 15-10-420) – for the purpose of purchasing disability income insurance coverage or workers’ compensation coverage for volunteer firefighters of volunteer fire departments.



Firemen's Disability and Pension Fund19-18-50319-18-504

Prior to March 1, 2017: The fund must be soundly funded. The fund is soundly funded if assets in the fund are maintained at a level (1) equal to at least 0.21% but no more than 0.52% of the total assessed value of taxable property within the limits of the city or town OR funding is maintained at a level (2) determined by an actuarial valuation to be sufficient to keep the fund actuarially sound. Whenever the fund contains less than the minimum required to keep the fund soundly funded, a tax should be levied, subject to 15-10-420. When the fund contains an amount that is less than 0.52% but more than 0.21% of the total assessed value of all taxable property within the city or town, the city or town council may, if authorized by the voters as provided in 15-10-425, levy an annual tax. Note: Once an actuarial valuation has been conducted, funding must continue to be based on actuarial determinations rather than on the total assessed value of taxable property (option (1), above).

Effective March 1, 2017: The fund must be soundly funded at fiscal year end. The fund is soundly funded if assets in the fund are maintained at a level equal to or at least three times but no more than five times the benefits paid by the fund in the previous or current fiscal year, whichever is greater; OR funding is maintained at a level determined by an actuarial valuation to be sufficient to keep the fund actuarially sound. The fund shall be reviewed on an annual basis to determine whether the fund is soundly funded pursuant to 19-18-503. Based on the annual review, if the fund contains an amount that is less than the minimum amount required to keep the fund soundly funded pursuant to 19-18-503, the city or town council shall, subject to 15-10-420, levy an annual tax on the taxable value of all taxable property within the city or town. If the fund contains an amount that is less than the maximum but more than the minimum required to keep the fund soundly funded pursuant to 19-18-503(1), the city or town council may, if authorized by the voters as provided in 15-10-425, levy an annual tax.

Forest or Grassland Hazardous Fuels Reduction Projects7-6-2527

In areas near homes and communities where wildland fire is a threat.

Insurance -Comprehensive2-9-212(1)

To fund the contribution for insurance, deductible reserve fund, and self-insurance reserve fund as authorized in this section. Also, to pay the principal and interest on bonds or notes issued for purposes of funding a self-insurance or deductible reserve fund and costs incident to the reserve fund.

Insurance - Group Benefits2-18-7032-9-212

See taxing authority for Comprehensive Insurance, above (2-9-212). Employer’s contributions for group benefits may exceed, but may not be less than, $10 a month.See “Insurance – Permissive Health Levy”, below:The amount in excess of the base contribution of a local government’s property tax levy for contributions for group benefits is not subject to the mill levy calculation limitation provided for in 15-10-420.



Insurance – Group Insurance for Firefighters7-33-4130AGO #18, Vol. 41

1st and 2nd class cities are required to provide group insurance to their firefighters if they provide such insurance for other employees. 3rd class cities are not required to provide group health and life insurance for volunteer firefighters.

Insurance - Group Insurance for Police Officers7-32-4117

Cities of all classes are required to provide group insurance to their police officers if they provide such insurance for other employees.

Insurance – Permissive Medical Levy2-18-703(4)(b)2-9-212

Subject to the public hearing requirement provided in 2-9-212(2)(b), the amount in excess of the base contribution of a local government’s property tax levy for contributions for group benefits is not subject to the mill levy calculation limitation provided for in 15-10-420. – See Requirement #18, above, for determination of levy amount.

Judgments2-9-3167-6-4015

Not subject to 15-10-420: A final judgment or settlement shall be satisfied out of funds that may be available from the following sources: (1) insurance; (2) the general fund or any other funds legally available to the governing body; (3) a special property tax levy, in an amount necessary to pay any unpaid portion of the judgment or settlement; (4) proceeds from the sale of bonds – property taxes may be levied to amortize the bonds. Judgments that are to be paid from the general fund (a) must be paid in the current year if there is sufficient money OR (b) must be paid from additional tax levies made in each of the next 3 years.

Juvenile Detention Programs7-6-502

For the purpose of financing the establishment and operation of juvenile detention programs. Levy proceeds may be used to contract with other units of local government to purchase services from available juvenile detention programs.

Library22-1-30422-1-316

A local government that has established a public library may levy a tax in the amount necessary to maintain adequate public library service. An additional tax may be levied if approved by the voters.Note: A Board of County Commissioners may not modify an annual library budget adopted by the county library trustees, and may not refuse, within statutory millage limits, to levy some or all of the property taxes necessary to satisfy an annual budget adopted by the county library trustees. (AGO #91, Vol. 41) However, the Commissioners may limit the overall funding of the library budget; to hold otherwise would allow the library trustees to adopt a budget that could assume the entire county general fund levy. (AGO #3, Vol. 48)Joint City-County Library: The governing body of any city or county entering into a contract for a joint city-county library may levy a special tax for the establishment and operation of a joint city-county library.



Local Government Study Commission7-3-184

Not subject to 15-10-420 – the governing body shall appropriate an amount necessary to fund the study, and may levy mills in excess of all other mill levies authorized by law to fund the appropriation for the support of the study commission.BARS Fund #2350 – Unexpended money of the study commission does not revert to the general fund at the end of the fiscal year but carries over to the study commission’s appropriation for the following fiscal year. Upon termination of the study commission, unexpended money reverts to the general fund of the local government.

Multijurisdictional Service Purposes7-6-2527,7-11-1022 &7-11-1112

MCA 7-6-2527 provides that a county may impose a property tax levy for multijurisdictional service purposes, as provided in 7-11-1022.7-11-1022 provides that a special district created by a combination of local governments acting together must be administered according to an interlocal agreement. The local governments shall proportionally share the ownership of real or personal property acquired by the district pursuant to the interlocal agreement. 7-11-1112 provides that local governments organizing a multijurisdictional service district are authorized to levy property taxes in an amount not to exceed that authorized for the district in accordance with 7-11-1007. 7-11-1007 requires that the resolution creating a special district designate the estimated cost and method of financing the proposed program or improvements.

Museums & Civic Centers7-16-4105

For the purpose of procuring, equipping, and maintaining museums and civic centers, and a combination of purposes and facilities (see also Parks, below).

Open Space Land76-6-109

To provide and preserve open space land.Property taxes levied to pay the principal and interest on general obligation bonds issued for this purpose may not be levied against the properties described in 76-6-109(3).

Parks, Pools, Skating Rinks, Playgrounds & Youth Centers7-16-4105

For the purpose of procuring, equipping, and maintaining public parks, swimming pools, skating rinks, playgrounds and youth centers, and a combination of purposes and facilities (see also Museums, above).

Planning76-1-40676-1-111

The governing body of any city or town represented on a planning board may levy a tax for planning board purposes.

Port Authorities7-14-113167-10-4027-6-2527

For the purpose of establishing, constructing, equipping, maintaining, and operating ports, each municipality participating in the creation of the port authority may levy a tax. If the levy is insufficient, the city may issues bonds for this purpose, but only after approval of the electorate. Property taxes may also be levied to pay the principal and interest on these bonds.

Prevention Programs 7-6-2527

Including programs that reduce substance abuse



Protested Tax Refund15-1-402(6)(d) & (7)

Not subject to 15-10-420: If a tax protest action is decided adversely to a taxing jurisdiction and the amount retained in the protest fund is insufficient to refund the tax payments and costs to which the taxpayer is entitled and for which the local government is responsible, the taxing jurisdiction may satisfy the requirements by imposition of a “special tax protest refund levy”.

Public Health 50-2-11150-2-112 7-6-2527

City-County Boards of Health: To finance the county’s part of the total expenses, a tax is levied on all taxable property outside the incorporated limits of each participating city. Each participating city’s part of the total expenses is financed by a levy on all taxable property within the incorporated limits of the city. Tax proceeds must be deposited with the county treasurer who shall disburse the money as county funds.District Boards of Health: District boards are financed by appropriations from the general funds of each county in the district in proportion to the population in each county. First- and second-class cities which elect to be included in the district contribute to the county in which they are located in the way provided for city-county boards under 50-2-111.

Recreational, educational, and other activities of elderly (Senior Citizens)7-16-101(1)7-6-2527

To promote, establish, and maintain recreational, educational, and other activities of the elderly. The governing body may make payment of expenditures to nonprofit corporations or associations engaged in aiding the activities.

Resort community tax7-6-15027-6-15037-6-15047-6-15057-6-15067-6-1507

Resort tax must be approved by electors. The rate of the tax must be established by the election petition or resolution, but may not exceed 3% of the retail value of all goods and services sold as provided in 7-6-1503Annually anticipated receipts from the resort tax must be applied to reduce the municipal property tax levy for the fiscal year in an amount equal to at least 5% of the resort tax revenues derived during the preceding fiscal year.A resort community that received more resort tax revenues than had been included in the annual municipal budget shall establish a municipal property tax relief fund. All resort tax revenues received in excess of the budget amount must be placed in the fund. The entire fund must be used to replace municipal property taxes in the ensuing fiscal year.

Retirement – Firefighters’ Unified Retirement (FURS)19-13-214

For the purpose of making required contributions to FURS.

Retirement – Municipal Police Officers’ Retirement (MPORS)19-9-209

For the purpose of making required contributions to MPORS.



Retirement – Police – Local Funds19-19-301

Each city, other than one of the first or second class, that has a police retirement fund and that has not elected to participate in the municipal police officers' retirement system (MPORS) shall deposit in its fund monthly an amount equal to 11% of the total salaries for the preceding month paid to active police officers of the city, exclusive of overtime and payments in lieu of sick leave and annual leave. If the demand against a city for deposits in its fund cannot be met, the city may impose an additional levy in an amount that is sufficient to meet the demand.

Retirement - Public Employees’ Retirement (PERS)19-3-204

If the required employer contributions exceed the funds available to a city or town from general revenue sources, a city or town may levy a tax that is sufficient to raise the amount of revenue needed to meet the city’s or town’s obligation.

Special Improvement District (SID) Revolving Fund7-12-4222

A tax may not be levied if the revolving fund balance will exceed 10% or, with the amount levied by the tax, will exceed 10% of the then-outstanding SID bonds and warrants secured by the revolving fund after all required transfers have been made to the district funds through fiscal yearend. Transfers may also be made to the revolving fund from the general fund, which shall be considered as loans. Further, to provide funds for the revolving fund, the city or town council can include in the cost of improvements to be paid from the proceeds of the bonds or warrants (if secured by the revolving fund) an amount of at least 5% and not more than 10% of the bonds or warrants to be issued.

Solid Waste Management 75-10-112

To finance a solid waste management system

Transportation –Senior Citizens and Persons with Disabilities7-14-1117-6-2527

The proceeds of the levy may be used to: contract with public or private transportation providers for services; augment or subsidize provisions provided by public transportation

providers; or establish and operate an independent transportation system for senior

citizens and individuals with disabilities.


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